European stock markets are anticipated to begin Wednesday's trading session slightly higher ahead of the release of US CPI data.

As investors carefully await the publication of significant U.S. inflation data as the earnings season continues, European stock markets are anticipated to begin Wednesday's trading session slightly higher.

The U.S. Fed signaled this week that, if the evidence permitted it, it would decide to suspend its aggressive cycle of monetary tightening at its next meeting in June.

The stock markets are now in a state of neutrality as they wait for the publication of the U.S. CPI, which is scheduled to be released later on Wednesday. Friday's official jobs data usually came in stronger than expected.

The report is anticipated to reveal that the core index, which leaves out volatile food and fuel costs, grew by 5.5% on an annual basis in April after increasing by 5.6% the previous month.

The expectation for a 5% annual increase in the headline rate indicates that inflation is still sticky and remains significantly over the Fed’s target inflation rate of 2%.

Meanwhile in Europe, the largest economy in the eurozone continued to experience high prices in April as consumer prices in Germany increased by 0.4% on the month and 7.2% annually.

Also during Wednesday’s session, earnings from companies including ASOS, Continental, E.ON, Tui, Credit Agricole, and Telecom Italia will be released.

Oil prices dropped early Wednesday as reports from the industry suggested an unexpected increase in U.S. oil reserves, sparking worries about a potential decline in demand from the world's top consumer.

Data from the API showed that for the week ending May 5, U.S. crude stocks increased by almost 3.6 million barrels, while petrol stockpiles increased by slightly less than 400,000 barrels.

Later in the afternoon, the official figures are expected, and traders will also examine the U.S. inflation figures for hints about potential Fed interest rate decisions.

(investing.com, reuters.com)